CMC Professors Criticize Obama's Economic Plan
In case you missed the news on other blogs, recently CMC economics professors Marc Weidenmeir and Richard Burdekin joined numerous other economists of national and international acclaim to oppose President Barrack Obama's economic stimulus plan. The criticism came in the form of a nationally syndicated advertisement run by the Cato Institute, which called for conservative economic policy to amend the current economic crisis. The advertisement notably featured the signatures of James Buchanan, Edward Prescott, and Vernon Smith, all three Nobel Laureates. The advertisement read as follows:
"There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy."
— PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009
With all due respect Mr. President, that is not true.
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.